Question

Quantum Logistics, Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the Alabama-Georgia border. There are three cities being considered. After site visits and a budget analysis, the expected income and costs associated with locating in each of the cities has been determined. The life of the warehouse is expected to be 12 years, and MARR is 15%/year. City Initial Cost Net Annual Income Lagrange $320,000 $205,000 Auburn $880,000 $35,000 Anniston $1,040,000 $455,000 a. What is the annual worth of each site

Answer 1

Answer:

Lagrange Annual Worth $145,966.15

Auburn Annual Worth $873,543.17

Anniston Annual Worth=$435,814

Explanation:

Calculation to determine the annual worth of each site

Using this formula

Annual worth of Project = A - P* r/(1-(1+r)^-N)

Let plug in the formula

Lagrange Annual Worth = $205,000-$320,000*15%/(1-(1+15%)^-12)

Lagrange Annual Worth = $145,966.15

Auburn Annual Worth = $880,000-$35,000*15%/(1-(1+15%)^-12)

Auburn Annual Worth=$873,543.17

Anniston Annual Worth = $455,000-$104,000*15%/(1-(1+15%)^-12)

Anniston Annual Worth=$435,814

Therefore the annual worth of each site will be :

Lagrange Annual Worth $145,966.15

Auburn Annual Worth $873,543.17

Anniston Annual Worth=$435,814